Chainline Questions - Please Help

Singlespeed & Fixed Gear"I still feel that variable gears are only for people over forty-five.
Isn't it better to triumph by the strength of your muscles than by the artifice of a derailer? We are getting soft...As for me, give me a fixed gear!"-- Henri Desgrange (31 January 1865 - 16 August 1940)

Chainline Questions - Please Help

I have a Sugino RD2 crankset on an old Shimano branded BB spindle in a 68mm BB shell. The spindle is 120mm (D measurement in pic) and I get a front chainline measurement of 42mm (measured from middle of seat-tube to middle of chainring teeth) with the chainring mounted on the INSIDE of the crankarms.

My question is, how am I getting this chainline with a 120mm spindle if the matching RD bottom bracket (103mm spindle) specifies a 42mm chainline when used with the RD2s?
I would like to replace this old BB with the Sugino cartridge model.

Additionally, do the chainline specifications for the RD bottom bracket call for the chainring to be mounted on the inside or outside of the crankarms?